Lenders usually won't give you a loan or credit card if you don't have a credit history. So, those just starting out, like younger people, sometimes find it difficult to get an auto loan or take out a mortgage, for example.
In early 2019, Experian—one of the three major credit reporting bureaus—introduced "Experian Boost." This online platform allows people with thin credit files (not much credit history) to raise their credit scores (potentially).
When first introduced, Experian Boost looked only at utility and telecommunications payments. Experian recently announced that Boost would also consider monthly rent payments when building consumers' credit scores. When you connect your bank, credit card, or another service provider to Boost, it looks for bills that have a positive history you can add to your Experian credit file.
With Experian Boost, you give Experian access to your bank account. After you let Experian connect to your bank, it can identify certain payments, such as utility and telecommunications payments. Experian then looks at whether you regularly pay these bills, adds the information to your Experian credit report, and uses the data to create an updated FICO score.
So, some people might be able to get a higher credit score, making it easier to get new credit.
Experian Boost will consider your rent payments if you pay your rent online to select property management companies or through specific payment platforms. So, if you pay your rent with cash, by money order, by personal check, or on a mobile payment transfer app like PayPal, Venmo, or Zelle, your rent won't qualify.
Also, you must have three or more qualifying residential rent payments within a specific amount range within six months. And the rent must be paid to a qualified property manager with one payment within three months.
If you have an active mortgage account or any other rent tradeline on your Experian credit file, your rent doesn't qualify.
Your rent also probably isn't eligible if a third-party data furnisher has already provided any rent or mortgage data to your Experian credit file.
To find out if your rent will count toward Boost, you have to sign up for the service.
According to Experian, users who received a boost from non-rental data saw an average improvement of 13 points in their FICO 8 scores. Keep in mind that the option to use rent payments to increase your score is new, so we don't know how many points it might add to your score.
And using Boost might not help your score at all.
To sign up for Experian Boost, visit the Experian website. But before you do, consider the following downsides.
Again, you might not increase your score at all by signing up for Boost.
Even if your score through Experian does go up, you might not increase your chances of getting approved for a particular loan or type of credit. That's because whatever lender or creditor you've selected could base its decision about whether to lend to you on information from one of the other credit reporting agencies—Equifax or TransUnion—rather than Experian.
Also, there are many different types of credit scores. Experian Boost credit scores are calculated based on the FICO Score 8 model. Most mortgage lenders, for example, don't consider these credit scores. They typically use the Classic FICO score.
In addition, a major data breach happened at Equifax (another credit bureau) in 2017. You should carefully consider whether you should provide your personal information, like your bank account data, to a third party, such as a credit reporting bureau, knowing that hackers could potentially get that information someday.
It might not be worth the risk of exposing yourself to identity theft to maybe add a few points to your score.
Another concerning part about this scoring system is that it was developed basically as a mechanism to increase loan approvals and make it easier for consumers to get credit. Experian Boost is just a manufactured way to raise someone's credit score barely enough for them to qualify for credit cards and loans. So, who ultimately profits from you using Experian Boost? Lenders and banks.
Just because a lender will make a loan to you or give you credit doesn't mean you should take it. Ultimately, you're in the best position to determine whether you can afford to take on new debt.
If you want to build your credit and raise your credit scores, you could (instead of using Experian Boost):
Effective date: October 7, 2022